Discussion: What are good legal entity structures for new EA groups?

Say I have raised $20k-$400k for a new EA pro­ject/​or­ga­ni­za­tion. I want to spend that money on tal­ent and ser­vices. What kind of le­gal en­tity should I use for this? Is there any good ad­vice on how to go about set­ting one up for this pur­pose, and how to main­tain it af­ter it’s set up?

This ap­plies to me, but I imag­ine that there may be many other new groups con­sid­er­ing or plan­ning set­ting up the le­gal and fi­nan­cial in­fras­truc­ture for rel­a­tively-small pro­jects and or­ga­ni­za­tions.

Some op­tions:

A US 501(c)(3)

A 501(c)(3) would al­low for tax de­ductibil­ity from Amer­i­can donors. How­ever, from what I un­der­stand, these are the most ex­pen­sive and difficult or­ga­ni­za­tions to set up and man­age. At some point in an or­ga­ni­za­tion’s life, it prob­a­bly makes sense to reg­ister, but this seems like a lot of work dur­ing the be­gin­ning, es­pe­cially if it is not ob­vi­ous how long the pro­ject will last or what will be­come.

Get spon­sored by an ex­ist­ing 501(c)(3)

Get­ting spon­sored by an ex­ist­ing 501(c)(3) would al­low for tax-de­ductible dona­tions and may help with some of the op­er­a­tions. How­ever, is not ob­vi­ous who in the EA com­mu­nity would do this. I have not heard of many EA or­ga­ni­za­tions spon­sor­ing other groups. Spon­sor­ship would be a li­a­bil­ity to the spon­sor­ing or­ga­ni­za­tion, so I imag­ine groups would be quite hes­i­tant.


Right now an LLC seems like gen­er­ally the best op­tion to me, but I’m not sure. It doesn’t get tax de­ductibil­ity, but this may not be a big deal if much of the money is com­ing from non­prof­its (as would be true for BERI or Effec­tive Altru­ist Funds grants). The Open Philan­thropy Pro­ject set up as an LLC for the flex­i­bil­ity it pro­vides, which I find in­ter­est­ing.

I imag­ine that set­ting up a Delaware LLC would be rea­son­able. Stripe At­las seems like an in­ter­est­ing op­tion for set­ting one up, though is geared more for in­ter­net com­pa­nies and is a bit ex­pen­sive.

Sole Proprietorship

This is prob­a­bly the de­fault op­tion for small amounts, but definitely has some down­sides. For one, it doesn’t limit li­a­bil­ity, and for an­other, the ac­count­ing could be quite messy.